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Chorus full-year profit growth stalls

NZ NewswireNZ Newswire 28/08/2016 Jonathan Underhill

Telecommunications network operator Chorus says lower regulated pricing for access to its copper services are to blame for full-year profit stalling, although it sees a resumption of growth in 2017.

It has also announced chief executive Mark Ratcliffe will step down in the middle of next year.

Profit was $91 million in the 12 months ended June 30, unchanged from a year earlier, the Wellington-based company said on Monday.

Operating revenue barely budged at $1.008 billion from $1.006b.

Both profit and earnings before interest, tax, depreciation and amortisation of $594m exceeded forecasts by brokerage Forsyth Barr, which also anticipated an uplift in 2017 earnings because of the Commerce Commission's more favourable review of its regulated pricing decision last December.

"While the final copper pricing outcome was an improvement on the benchmarked pricing, it has not restored our financial position to demerger levels, and the regulatory framework that may apply from 2020 remains far from clear," Mr Ratcliffe said.

Mr Ratcliffe became chief executive in 2011, having led the business when it was an operationally separate business unit within Telecom. That meant he was Telecom's lead executive for the ultra-fast broadband initiative and oversaw the demerger of Chorus.

The copper network still represents 73 per cent of Chorus's revenue and reflected just six months of the commission's final copper pricing determination. Basic copper fell to $489m from $491m while what it calls enhanced copper fell to $242m from $268m. Fibre revenue climbed to $133m from $98m.

Total fixed-line connections fell to 1.73 million at June 30 from 1.79 million a year earlier. Total broadband connections rose to 1.23 million from 1.21 million.

Chorus gave ebitda guidance for the current year in a range of $625m to $645m, even while raising its projected capital expenditure forecast to a range of $610m to $650m.

The compare declared a final dividend of 12 cents a share, making 20 cents for the year.

The stock last traded at $4.63 and has climbed 18 per cent this year.

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